NAFTA negotiators gathered at an informal session in Washington last week to consider ways to work around a main impasse of the talks so far, a U.S. demand on auto parts deemed unfeasible by Canada, Mexico and the industry.
This story by The Canadian Press appeared in Automotive News Canada.
The other countries intend to ask the U.S. whether there might be a way to rework the proposal in a manner palatable to everyone, while still achieving America’s goal of bolstering domestic auto production.
Time constraints are intensifying pressure to find solutions: Rounds are currently scheduled only into March, Mexico and the U.S. have national elections thereafter and President Donald Trump has threatened to start the withdrawal process to get a quick deal.
The main goal last week was to chip away at less-controversial chapters. But the Canadian side has some ideas for a new path forward on automobiles, a key priority for the Trump administration, elected on a promise to strengthen manufacturing.
The Canadian side thinks that goal can be achieved by moving away from the traditional method of calculating the content of a car. For instance, the current NAFTA says that a car’s pieces must be 62.5 percent North American to avoid a tariff and the U.S. has called for a ramp-up to 85 percent, plus a U.S.-specific 50 percent requirement, with virtually no adjustment phase-in period, to the dismay of other parties.
Canada is weighing a new calculation method that takes into account the full cost of a vehicle, including the most valuable components of modern cars — which, increasingly, are new digital technologies, light-weight composite materials and other intellectual property, for which the U.S. is a world-leading hub.
Both Mexico and Canada have said they’re willing to live with a less-aggressive review clause.